Academic

The WSJ has a nice article about my former securities law professor Henry Hu, now the head of the new SEC Division of Risk, Strategy and Financial Innovation.  In reading the article, I had the sense of someone who has been told a family secret and can now understand conversations overheard as a child.  I took Seucrities Regulation in Fall 1992 or Spring 1993. 

As a third-year, I may not have hung on every word spoken in that class, but I do remember Professor Hu talking very emphatically about how "rocket scientists" were being hired to come up with complex derivatives that no one understood and how these derivatives had severely damaged those who purchased these derivatives without knowing their risks.  These in-class warnings took place at least a year before Dell computers, Gibson Greetings, Proctor & Gamble, and Orange County would meet their respective derivative makers.

Now I realize, after reading the WSJ article, that while he was teaching us securities law, Professor Hu was busy writing Misunderstood Derivatives:  The Causes of Informational Failure and the Promise of Regulatory Incrementalism, 102 Yale L.J. 1457 (1993).  This article seems to be one of the bases for SEC Commissioner Mary Schapiro belief that Professor Hu will be able to predict the next market problem.  In addition, Professor Hu's work with Bernie Black on empty voting also caught their eye (The New Vote Buying:  Empty Voting and Hidden (Morphable) Ownership, 79 S.Cal. L. Rev. 811 (2006)).

The article quotes Judge Higginbottam as calling Professor Hu a "Cassandra."  How do Cassandras do in administrative posts?  I was thinking of this in biblical, not classical terms.  Would anyone listen to a Joseph these days?  Do we really want "someone to lead us through the famine/ with a flair for economic planning?"